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Petrol excise rise a vote changer for some

Colin Brinsden, AAP Economics Correspondent

Australians can put up with a lot, but don't tinker with their petrol price.

While business appears to have shrugged off the negative rhetoric surrounding the federal budget - at least for now - consumers are clearly unhappy about a potential increase in the petrol tax.

On Tuesday Treasurer Joe Hockey will hand down his first budget, which will include a deficit tax on high-income earners, a co-payment for visits to the GP, a future increase in the pension age and cuts to welfare benefits and the public service.

But one likely initiative in particular, the return of twice-yearly indexation of the fuel tax, has raised the hackles of voters.

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A survey on the eve of the budget found that nine in 10 Australians are either concerned or very concerned about the tax increase.

Additionally, the survey by consumer advocate One Big Switch found more than half of 1200 people polled said the fuel tax would affect the way they voted at the next election.

Fuel excise was frozen by John Howard in 2001 in response to an electoral backlash.

Back then the relatively new 10 per cent GST inflated the impact of a rising global oil price, pushing the pump price toward $1 per litre.

Thirteen years later, the average price is around $1.50 per litre.

The Australian Institute of Petroleum weekly price report showed in the week ending May 11, the national unleaded price jumped by an average 5.7 cents a litre to 155.9 cents, with the price in metropolitan areas surging by nearly eight cents.

"The volatility in petrol prices ... doesn't appear to be helping anyone, just confusing motorists and making life difficult for retailers," Commonwealth Securities economist Savanth Sebastian said.

Still, the institute's report shows that Australia has the fourth cheapest petrol price among OECD countries and the sixth lowest diesel price.

Meanwhile, National Australia Bank chief economist Alan Oster is surprised his bank's latest monthly business survey showed a modest rise in confidence given the political rhetoric about a "tough" budget.

Confidence rose two index points to six points in April, recovering from its weakest level since last September's federal election in March and despite continued subdued trading conditions.

However, the overall trend in confidence has fallen from last year's highs, Mr Oster said.

"Soft forward orders and headwinds from business investment and a soft labour market suggest this trend may continue over coming months," he said.